Greenlight added new stakes in Japanese regional bank Resona Holdings, solar power-plant developer SunEdison Inc., telecom business Altice SA and specialty retailer Conn's Inc., while shorting several “high-flying momentum stocks” it didn’t identify. Losses in technology and biotech stocks have hurt a slew of hedge funds in March and April, with some firms posting double-digit declines. March marked the worst performance for stock hedge funds relative to the broader stock market in more than five years, Morgan Stanley said.

Greenlight called the current period “our second tech bubble in 15 years” and wrote that the firm had limited its short bets against certain momentum stocks because such bets can be “dangerous” when stock prices become unmoored from companies’ fundamentals. “What is uncertain is how much further the bubble can expand, and what might pop it,” the letter said.

The hedge fund paused in its letter to address high-frequency trading, an arena Mr. Einhorn has been brought into with his backing of IEX, the new exchange at the center of Michael Lewis’s book “Flash Boys.” While Greenlight said there were plusses to high-frequency trading, it also said there were “areas that are ripe for reform.” Greenlight encouraged investors worried about being taken advantage of by high-speed traders to rout their orders to IEX.